Behavioral Finance

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How information is presented, or “framed,” and other personal biases affect decision-making. The TIAA Institute focuses on such issues as how to motivate people to make decisions about when to claim Social Security, whether or not to annuitize, and how to save for retirement.

As older Americans tap into their retirement funds, they often face a choice between receiving a smaller, immediate payout and a larger, future payout. How does memory affect these “intertemporal” choices?

We conduct and analyze two large surveys of hypothetical annuitization choices. We find that allowing individuals to annuitize a fraction of their wealth increases annuitization relative to a situation where annuitization is an “all or nothing” decision.